Publishers justify $13-$15 e-book prices for Apple iPad - Page 3

So no one can actually show any proof that Amazon is taking a loss, yet no one seems to question this?

How does this author do this before they become well known? Who pays their expenses then? Should they mortgage their house, if they have one? Ty to take a loan out from a bank (which won't give it to them for this anyway)?

Guys like Dan Brown and Patterson get millions as an advance on every book they write. If they leave the publisher, that won't happen. Most of them are quite content where they are. The reason why most authors move to different publishers is because they don't think they're being promoted enough, aren't being given the best editors, etc.

How will that work when there is no publisher?

I fully understand the marketing strategy and financial logic behind the higher premium prices for e-books, HOWEVER, I still believe it's all verging on ridiculous. I think a "sweet spot" from a CONSUMER VIEWPOINT for e-book prices would be between $3.99-$6.99. Yes, I know this is impossible financially due to the various royalties & costs involved by the publishers, but $12.99-$14.99 will make me very less likely to purchase their books. The ONLY exception would be textbooks. I will be willing to pay top-dollar for textbooks that don't weigh 10 pounds in my bag.

There's a neurotic need to justify the price of an ebook being in the sub-$10 range because it is just electronic bits, while the paper versions have a "real-world" and somewhat lasting quality to them. That's just the plain wrong angle to take. There's only a loose connection between how much something costs to make and how much we are willing to pay for it.

With digital, more then ever, it will test people's ability to value the experience over the physical object. It's going to test how much we value reading a great book. If the collective we don't value a good book enough to buy digital fiction books for $15-$30, it'll be interesting to see how the industry will change if the range is really $5-$10 for first releases.

It's going to be like App Store economics, the good brands will command higher prices ($15), while the smaller brands and unbranded have to start cheap and build the reputation until they can charge more. Man, that kind of sucks as authors tend to be really good when they are starving and trying to get published, but once they've made it, they are spent and running on fumes. It should mean the cream rises to the top and stays more expensive.

Yes, all things being equal, promotional support will continue to play a large part in the success of today's blockbuster books... same situation as music and movies.

Well, you've got to reorganize your products, and cut off the space you're renting out, that's a big expense, and I don't know any landlord that is so easy going as to allow the renter to determine how that will go. Not now, when it's so difficult to find someone else to fill that now empty space that the landlord just spent thousands in blocking off, adding alarms to etc.

When we rented our third floor, it took a while because the other small tenants had to finish up their leases, though we bought one small guy out. 15 years later, when digital allowed us to give up some space, the landlord insisted that we give back half the floor and nothing less. I had to re-design part of my lab to accommodate that. It wasn't easy.

For a warehouse holding hundreds of thousands of books organized carefully, I feel as though it would be difficult to just give up some space. There would be less of each book but the same number of books for years to come. That's not an easy reorganization.

That site is citing law suits where producers, actors who were promised a percentage of net profits in the biggest movie's that have ever been made are paid nothing because the studio claims there are net profits.

If Star Wars, LOTR, Spiderman don't make money, which movies do? What keeps these studio's in business?

One way is when a company refuses to give any information out. When they are doing well, they shout it out.

There are lots of articles about the frustration, and the skepticism.

http://www.tomsguide.com/us/Amazon-K...news-5461.html

This shows what they get relative to what they pay. A good article overall. There's a lot more of this but I hope this is enough.

http://knowledgeproblem.com/2010/02/...iscrimination/

What the article here didn't cover,is that McMillian and others are proposing that when hardcover books first come out, the price will be $12.99 to $14.99. Over time, they will decline to $4.99. That seems fair. It's still below the price of a discounted paperback.

Probably the same thing that tells us it is cheaper to hire a qualified electrician to wire a house than to do it ourselves.

As adage goes, a man who defends himself has a fool for a lawyer.

Just what would a writer know about managing a business. Even the best financial writers use a publishing house. Cripes, the legal fees alone would kill a novice author/self publisher, especially the likes of Dan Brown.

Dan Brown is on the promotional tour. It is part of his contract with his publisher and the marketing costs as tabled above by the New York Times. If he had to do or manage everything that it takes from creating awareness to hawking his wares himself, he couldn't do what he does best, that is, write.

I understand what you're saying. You're saying that it takes time to wind down warehouse space. But my point that it can be done.

Just because you have to pay rent for a temporary period of time while you wind down your warehouse foot print doesn't mean you should continue to pay rent and to distribute less profitable hardcover books when you have a more profitable alternative.

The reason for raising e-book prices has nothing to do with the cost of warehouse space. It has only to do with increasing profits, and stemming the growth of e-books.

All these costs have nothing to do with distributing physical books. With the e-Book in play, I could see a lower cost publisher that does everything that the current publisher's do minus printing, storing, and distributing the physical books.

Plus, with iTunes and Amazon, the middle-man expenses are much less, as you don't have to support stores like Barnes and Noble who need to pay rent and hire employees.

Anyone can sue anyone. Often, these suits aren't correct. Often, the person suing got a bad deal because his (or her) people doing the negotiating did a poor job (or worse, the jerks did their own negotiating!), and now want to make up for it. Sometimes the studios are hiding something. When you look at the studio profits, they aren't that great. Long gone are the days of movie moguls spending money like it is water.

That's ended everywhere.

When I started out in Advertising photography for McAnn-Erikson in 1969 (at 19), budgets were overflowing. When, a year later, I took over the main accounts at our studio, I was given a spending account that would choke a horse. Go to the best restaurants, they told me. Take a couple of your models with you, they told me. Show off at the disco's. Well, those were the days! but in the 80's things slowed down (after I got out), and have been slowing down ever since!

That's been true at all of the businesses associated with entertainment and the advertising industry. Cash is tight these days.

We've been spoiled by the price implosion in the App Store. Not everything's going to be free or 99 cents.

Anyway it will be interesting to see what the average eBook price ultimately settles at.

I agree. No problem there. I'm just saying that it won't be easy, especially in these times. In 2006, sure. The landlord would be happy to get space back. but today? Nah! Unless they're as nice about it as you seem to be. You know what the chance of that is. Getting space back that they won't be able to rent isn't something they would look kindly on. Particularly if they have to go in pocket to make that space usable. And it would depend on what is being paid per square foot. How much would the publisher really save by giving up some space after the costs of doing so are taken into consideration? If it's a small percentage, then it might not pay. It might not pay until 20% could be given back.

At any rate, it's just a supposition right now, as e-book sales are so low.

The prices of e-books are lower than the hardcovers they are replacing. That's what matters. Look at the links I provided in another post to see why Amazons pricing isn't sustainable, or if it is, why not only publishers, but writers as well will be getting the shaft.

What I find interesting is that no one seems to be looking at the smaller amounts the writers would be getting if Amazon's pricing was profitable for them. Why should an author be willing to take less than they're getting now? That makes no sense. All most people here seem to care about is how much THEY pay, not how much the author, or for that matter, anyone associated with doing the book, would be paid. If publishers are paid substantially less, then everyone working these will have to be paid less as well.

Are people here willing to take a cut in their own pay? I doubt it.

The $9.99 sample doesn't work because it's called the Amazon plan while you're reporting on the Apple "Agency" plan of 30%. and the Agency's 30% flat rate plan is based on higher Amazon selling prices forced by Macmillan and others.

Amazon's own plan has given publishers about 50% (traditional industry average) of PUBLISHER-DETERMINED LIST PRICE as opposed to Amazon's sale price. So, they have used "$9.99" ebooks as loss leaders and charge a bit more for older books. Macmillan and others pay authors from the 50% of List Price they set no matter what Amazon sells the book for.

The NY Times article didn't base revenues on a $9.99 e-book price because Amazon pays the publisher based on the HIGHER list price the publisher sets.

This makes a huge difference.

So what you're saying is that either (a) Peter Jackson, Tom Hanks... etc. got paid and they are lying and say they didnt or (b) the studio actually didn't make any money.

I find (a) much harder to believe than (b), since all the studio has to do to defeat the lawsuit is to produce the bank statements so we're back to Star Wars, LOTR, and Spiderman being money losers.

And before you say I'm over simplifying the lawsuits, I'd argue that I'm not.

In all three cases, the plaintiffs allege that (1) they were entitled to a percentage of the net profits and (2) they were not paid.

The studio defense is that the movie made no net profits, thus the the plaintiffs were not entitled to any payments.

Easy: Lower prices means more books sold. Though the author makes less money on each book sold, he will sell more.

That or authors need to renegotiate for a fixed amount per copy sold, whether e-book or physical book. But they haven't been doing that yet, so there's still no reason for e-book prices to increase.

I'm not calling fraud, only creative accounting. Books aren't generally big budget production items.

e-books don't require warehouse storage? Then don't whine about the cost of warehouses; sell them and move along quietly.


Everybody still gets paid except perhaps the producers and investors.

Tangent: Authors don't earn anything from book sales until their advance has been recovered. The uncertainties surrounding e-books might lead publishers to offer smaller or fewer advances. Authors will tend to be compensated more from their successes than from expectations of their success.

1 DOLLAR. That is the fair price for something that can be replicated for ever at no cost. The same for any CD, DVD or Blu-ray downloaded from their owners using P2P. They increase worldwide sales thousands of times. Piracy disappears overnight. Everybody wins.

You know, they could hire all these people to do that and form some sort of a group and they could farm out their services to others who can't afford to hire their own people and to new writers. After all, an author only writes a book every year or two so they would have plenty of time on their hands.
They could call this a "publishing group".

I'm not saying anything about particular cases, because I don't know any more about them than you do. What I'm saying is that negotiations are tricky in this business. It's a very complex one, with rights differing in each country and region. With payments for DVD and goods often being separate, and depending on the success of the film, it can be impossible to determine who gets what.

The people who did those negotiations should have known about the "net" vs "gross" profit issue before they sat down at the table. Why didn't they work it out properly then? Major stars have big advantages over the studios when negotiating for a role. Often the money is made or lost depending on the stars. The studios know that. So if these people negotiated for part of the net profits, where everyone in the industry knew what could happen there, whose fault was it?

Part of those gross and net profits could have been written into a contract for another film long before the first film was finished, depending on the expectations of performance. That often happens. So who gets first cut?

Easy for you as you have no stake in it. Economics 101 says that as prices decrease, there will be a point where greater sales result in less profit. The same is true when prices increase. The question is where that price point is. At what number should the author set their royalty?

But there are many people in the industry who aren't getting paid on book sales numbers. Those are the vast majority who are on fixed salaries (especially these days with no bonus's (Unless you're in the top of the financial industry) or raises). Are you going to cut their salaries as well? What about all the other fixed costs? I already brought this up, and it's important.

What I do see, eventually, is a price point much like the "remainders" section of a bookstore. Books that have been out for a long time, and are no longer selling, are sold for $5. Sometimes as low as a buck. There is no reason why that can't happen here as well. McMillion already said that they want to drop prices to $4.99. After a longer time, they may want to go even lower, if the book is no longer selling.

In addition. Authors are sometimes given the rights to their books back after a time, and then they could charge $2.99, or lower. That could work as well.

This is an interesting article by a writer:

http://www.tobiasbuckell.com/2010/01...le-via-amazon/

They are nuts, they better give your a printed copy too for that price, or at the LEAST allow printing of the book! How much could it cost to duplicate bits once created?!

Just to let everyone know, having been in the industry, there is a lot of bullsh*t and lying going on with publishing.

Consumers here are trying to get at the numbers, because it's hard to fathom why publishers who were content with current e-book prices now need $14-$15 which still incurs a loss for them according to data provided by the New York Times.

If the poor publishers are only making a mere $4 per book, they should be charging $21 for a iBook Store e-book version of a $26 paperback book. $5.20 is all the cost savings difference between the two versions (paper and e-book) according to their data.

At $14-$15 for a e-book version of a $26 paper book, publishers are paying to get their books on the iPad, so something is obviously wrong. The figures given by the New York Times are misleading, because publishers wouldn't be doing e-books if it was losing them money. So it seems like they are using their publishing buddies in the New York Times to give out misinformation to the general public.

Crying poor mouth.

With publishers holding all the cards, it's difficult for anyone to verify anything. Even the authors.

The only thing I believe is close to accurate is the printing, shipping and storing costs of $3.20 a book the article mentions. It's hard to fudge these numbers because so many businesses uses the same services, especially the New York Times.

Creative accounting verges on fraud if it can be proven that what was done was done to avoid paying off a legitimate debt.

Right now, e-book sales are less than 5% of book sales. Look at what happened with iTunes and other music services, it took years to get to where they are today, and that's still under 30% of music sales.

You can't get rid of warehouse space 1% a year. It has to be done in chunks.


The producers have to get paid too, They do a lot of work. And the investors are covered by insurance and other cross deals.


The advance is a royalty payment up front, in a sense. It is a payment, and must come out of the price of every book sold until, hopefully, enough books are sold to pay it down. Usually, it doesn't happen.

Advances serve another purpose. For new authors, and authors who sell few, but profitable books, it's a way of paying their expenses so that they can work on their book without having to work to pay for their expenses. Or at least to make it easier. The entire concept became perverted in the race to obtain ever bigger selling authors or names, so that now the biggest can get $10 million in advance for a book. Absurd!

The Times data shows a profit, not a loss.

The response from the publishers was just marketing propaganda. But some of you seem to have fallen for that. There is one line in this propaganda response that is only true answer and all you need to know. "Publishers are also wary of making e-books too cheap for fear of killing off booksellers like Barnes & Noble." Right here they are telling you what the real issue is, if Barnes and Noble was gone you would see a much lower price and they could lower their prices.

This was the same stupid comment from the record industry when they said we don't want to lower their prices for our music on iTunes because they wanted to protect companies like Tower Records. When Tower Records filed for Bankruptcy and the main distribution point was gone for the record companies all of a sudden Music was available at much in larger quantities and lower prices.

We have heard the arguments about paper vs digital for years. This may finally be the platform on which the former finally gives way to the latter.

Other than fondling the physical product and the smell of a new book, I see nothing but downside to printed products. Given the shrinking and misuse of resources, the environmental argument against paper is pretty compelling. Paper comes from trees that are logged hundreds and thousands of miles from paper mills; to produce white paper, you need to bleach the fibres--where do we think those waste products end up? Then the books go elsewhere to be bound, travel to shops, warehouses and the great etc. But, while I concerned with the environment, for me the real downside of books and journals is storage. In my life, I've moved from the US to Spain, Berlin, the Canaries, NYC, Virginia, and now live in the UK; each time I traveled with two dozen boxes of books. I hated carting them up and down stairs in and out of lorries and by ship three times across the pond. I'd have gladly traded that sweat for a 6-ounce hard drive that had all of the information in those books. And when I retire to Italy within the next five years, I can guarantee, I won't have one hard copy of a book if it's available as an e-version. So for those who like having a massive library, I ask, do you own it or does it own you? If you have to spend a week moving your precious library from point A to B, I'd argue that it owns you, my friend.

I'm tickled to death that dictionaries and travel guides are accessible from the iPhone, which saves me enough weight that I can live for a month from my carry-on; no more luggage in the hold. I can't wait until all of the publisher produce all of their books as e-books

Have you punched this into a spreadsheet yet?


The Times data is assuming the author, cover design and copy editing costs are percentage costs, when they are more like fixed costs and are required for the paper book model which the e-book model is dependent upon.

Applying those fixed costs to the e-book version yields little or no profit, the e-book version needs to retail for closer to $19 to realize the same profits as the $26 version.

So the question is, if publishers were supposedly doing fine with the Amazon model and they are losing money with the $13 model what is wrong?

The data apparently, publishers are making a lot more money that what the Times is stating.

I don't hear any authors screaming that they hate the e-book model because it cuts into their profits, so they must be getting a per issue royalty.

I am saying that an ebook based on open standards and without DRM encumbrance has the potential to last much longer than a print book. Just as I plan to take steps to ensure my personal media (digital photos, home videos, journals) will last for future generations, I will try to do the same for my purchased consumer media (music, movies, ebooks, games). Obviously, the latter is much more replaceable, and probably much less relevant to my descendants.

tzb

I'm sorry but I find this funny. So the selling point for a product is it's potential, but potential for what? To fill the need for... something new and cool? Apple is attempting to sell us something that we really don't need. The iPhone is useful because, well it's a phone with internet on the go. The iPad is useful because... well it's a decent ebook reader (although eink may prove to be easier on the eyes), i'm sure it'll have "fun" apps, but aside from that, what can you really do with it that you can't do on something else, in an easier fashion, ie; take out my iPhone and check my mail, read a document quickly, etc...

I just don't understand the need for this product, and to now have other ebook dealers go up in price because of the introduction of the iPad is a shame. There is absolutely no justification for it, and sorry, but I can't wait to see pirating skyrocket due to ridiculous pricing schemes.

Oy... sorry for the rant, just after reading these comments on this post and around the forum, it seems that Apple can do no wrong, even though it's so obviously clear that Apple is just tapping into this need based consumerist economy and giving us things we don't need, at all.

Publishers still have a lot to offer creators. One just has to look at the App Store to see that. There are a lot of self-published apps and that's really wonderful. Yet there are still publishers like Chillingo and Ngmoco which will help creators polish their works and get them noticed. In such a crowded market, that kind of help is very valuable.

Also, if publishers have been helping the market by getting more works out there (subsidizing lesser known authors with the profits off of bestselling authors), how will the absence of any publishers affect the diversity of the market? (While also making sure that most published works have at least been run by an editor so I don't have to deal with the blatant spelling, grammar, and badly constructed works that would result in a purely self-published market.)

Like all the articles I've seen on this topic, the paperback phase pricing of ebooks remains unaddressed.

You can look at the numbers presented in the Times story, as the one here presents some of the info, but not all of it. If you did, or read the post that contained it, you would see two different pricing schemes. You could see where the money goes.

If you simply don't want to believe that, then there's nothing that can be done to help you, and you'll have to come up with different numbers from another reliable source.

As for the Tower situation, you can show us some proof that music was suddenly available in much larger quantities and at lower prices? We would all be interested in knowing that.

I'll echo others. There ain't any bestselling hardcovers on Amazon that are $26. They are in the $12-$16 range.

And considering the reseller doesn't have to keep warehouses full of books and you don't have to have distributors who take a cut etc then the cost for an e-book should be under $10. $9.99 was too much.

The problem is the publishers want to make even more money off ebooks than they were with hardcovers and paperbacks.

Hell publishers can start their own site. Put a computer in the basement and have it serve up millions of books. They take up next to no room. BAndwidth and computing power to do that is dirt cheap. And make a simple program to download the books and throw them into iTunes like Amazon does with mp3s.

One thing for sure is these guys are never going to price things too low.

Well, I understand your doubts. It is a new untested product market (isn't really comparable to tablet PCs). And I really think that if Apple didn't have some eBook offering along with the entire App Store/iTunes media library to back this product, they would have a incredibly hard sell facing them.

However, I do believe that GBQ is right in seeing the real value in what's not offered yet. There are many things I can do on the iPhone that would be a much better experience on something larger. Browsing, email, and reading ebooks are the easy examples and are all offered as selling points now. And there are certain to be many more. Maybe you can think of some application on your iPhone that just feels too cramped to be truly useful. I think that this year we'll start seeing applications for things that would be impractical as an iPhone app. iWorks is a good example.

So if you don't see anything compelling right now, that's fine. Wait it out until something does catch your interest and make it worthwhile. I'm sure the reasons to have one will grow. And let's face it. Apple is a consumer electronics company, and most of what they sell that are popular aren't "needed" in any true sense. Yet when I get use to having them in my life, I really don't wish to go back. Phones worked before the iPhone. Yet it wasn't until way after it came out that other companies stopped saying how we didn't "need" anything it offered and started trying to match it's experience and utility.

The author is a percentage, because they get paid for every copy sold. The other costs are simply being broken down to account for a certain number of books sold, the number of which wasn't stated. Usually, from what I remember, there is a supposed number of copies sold for which costs are broken into. It's similar to my own manufacturing company. We had certain costs, such as R&D (think of advance), which were figured into a certain number of devices sold. After that number was met, we would lower prices by a certain amount. I don't know what the average number of copies are sold these days, excluding mega hits, but it's small. Just a few thousand. All the costs are assumed into that average number so that they can be recovered. Hopefully, that can be done.

Publishers were getting 50% of the list on a hardcover fromAmazon, whatever that was. According to the info presented in the Times article, they are indeed making a profit on Apple's model. The assumption of profits comes from lessening the payouts to every area. A $10 book would give less profit to everyone than would a $13 book, which would give a slightly higher profit than the hardcover version if it listed for $26. Many list for more.

Authors are suing the publishers to prevent them from giving out e-book rights. Authors want to re-negotiate their contracts, while publishers are saying that publishing is publishing, no matter what the venue.

It isn't mentioned in the article. I don't know why. It's been stated elsewhere. I've brought it up several times here.

McMillin, and presumably others, has stated that what they want to do is to have the option to charge as much as $14.99 for new e-books, coming out the same time as the hardcover. This is before Apple's 30% cut.

But then they want to lower the selling price as the trade publication comes out, and again, when the paperback comes out, to end at $4.99.

I assume that these prices will come in tandem with the various paper issues.

So to get a book for my students, I pay $1 per book. Comes Christmas time or end of the school year, I spend a total of $60 on books, 1 for Christmas and 1 for end of the year for each student.

My cost for a PHYSICAL BOOK: $60 for 60 books.

Am I going to pay $13-$15 for ONE book? NO!!!